Emerging Trends in Real Estate
Since the Covid-19 outbreak, some real estate trends have accelerated, others have slowed or reversed.
Migration to the suburbs, which was already underway before the pandemic has accelerated sharply. Some folks feel that there is greater safety in less densely populated areas. While in many gateway cities, such as New York, real estate prices have collapsed to the tune of 20-25%, suburban and rural areas across the country areas seen a dramatic increase in home prices.
Due to COVID-19, the migration from cities to suburbs, multifamily developers no longer have amenity wars to attract new residents. Another trend has seen health and wellness improvements increasing in hotels, offices and more.
Recently, the Urban Land Institute (ULI) conducted a study where 1,600 leaders in the real estate industry were surveyed as to emerging trends in the real estate markets. Here are some of their findings:
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People are moving to the south in greater and greater numbers. The south, which offers a more favorable climate, is also less densely populated. Additionally, these southern states have more affordable home prices, and lower local taxes when compared to the big urban centers in the northern regions.
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According to the ULl study, 94% of respondents believe that commercial enterprises will adopt policies which allow employees to work from home, at least part of the time. Obviously, if this technique works, it would be a money saver for businesses as they downsize their commercial square footage of office space, which would serve as a money saver on rents and utilities.
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The study found that, the gateway cities would not achieve a respectable comeback for at least 3-5 years. In fact, no one knows if those cities will ever reach the heights they once enjoyed.
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In the retail market E-commerce was growing geometrically before the pandemic. Now, with many folks hesitant to shop at malls or on Main Street, it is likely that retail establishments will seek to downsize in terms of square footage, as more folks shop online.
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As real estate values fall in the great urban centers of the country, taxes paid to local governments will also fall. This will have a significant impact on local government services. This, in turn, is likely lead to even more out-migration.
The Forbes Real Estate Council agreed with the trends outlined in the ULI report, in addition to adding a few other predictions. According to Forbes:
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There will be an increased demand for more livable space, for the same health reasons listed above. As more social/work activities will be in homes, more space in homes becomes critical.
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Occupiers of office space will seek smaller spaces with shorter leases as they keep their fingers on the pulse of the pandemic.
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Builders who focus on healthy living spaces will benefit (better ventilation, more space indoor and outdoor, etc.).
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The Forbes Council believes that millennials will lead the way to the booming suburbs. As these young people grow families and work from home, more space becomes essential.
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Our northern neighbors in Canada will be attracted to low interest rates in the U.S. And states such as Florida stand to gain the most as this occurs.
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Lastly, the Forbes Council predicts there will be a growing demand for experienced agents as the market becomes more complex. According to Forbes: “Today, over half of transactions are facilitated by inexperienced, part time agents … People will prefer experienced agents that deliver best-in-class results.”
Should any readers need guidance during this unique real estate market, please don’t hesitate to contact me.